Refineries under fire as imports to rise

The federal government said more domestic oil refining plants might fold but it was not expecting the closure of facilities to impact Australia’s ability to secure sufficient oil supplies over the medium term.

In the paper, Mr Ferguson said demand for petroleum products would increasingly be met by increased imports threatening the viability of the local refining industry.

“Australian refineries will face continued pressure from international competitors and there may be further reductions in Australia’s domestic refining capacity," said Mr Ferguson. “At least until the middle of this decade it is forecast that there will be a surplus of refining capacity in the Asian region; however, Australia should continue to monitor market developments."

However, the White Paper added Australia was linked into global supply chains and import dependency should not imply an energy security threat.

Earlier this year, Royal Dutch Shell closed Clyde, Australia’s oldest existing refinery, on the rise of mega-refineries in the Asian region where a surge of new capacity has depressed margins in the industry. The move brought into doubt the future of the oil giant’s larger Geelong refinery.

Caltex Australia
in October closed one of its two petrol-making units at its Kurnell plant in Sydney, with the loss of up to 30 jobs, in advance of a broader review of its unprofitable refining business.

The closure of the 79,000-barrel-a-day Clyde unit has cut the number of remaining plants in Australia to six and raised questions over the long-term profitability of the country’s small, ageing refineries, which convert oil into products including petrol, diesel and kerosene.